The Value Proposition for Canadian Patents: Assess Commercial Viability First

You have invested a significant amount of time and money to develop a new product or service. Apart from the essential requirements for patentability (patentable subject matter, novelty, non-obviousness, and utility), the primary determinant of whether to file a patent application is whether you believe your new product or service is likely to be commercially viable.

If your product or service is commercially viable, patents can generate substantial income which will allow you to recoup your investment in research and development as well as profit financially from your invention. You can profit from patents by employing monopoly pricing on your products and services which embody the patent by virtue of the right to exclude others from the market, or, alternatively, patents can be sold or licensed to others to use for a profit.1 Patents may also be used as assets to secure funding.

On the other hand, if a patent does not cover a product or service that is commercially viable, monopoly pricing will be of little benefit and others are unlikely to be interested in purchasing or licensing the patent. Since obtaining a patent in itself is not an assurance of commercial viability, a proper assessment of commercial viability prior to deciding to apply for a patent is needed to ensure that patent and other business expenditures on a new venture are sensibly made.

Corresponding Canadian Patent Filings Are Good Value

If you believe your new product or service is likely to be commercially viable and you intend to seek patent protection, in most cases applying for a patent in the United States is a logical choice. According to a July 2012 report of the World Intellectual Property Organization,2 the United States Patent Office was the top patent office in 2010, receiving 490,226 patent application filings in 2010. This is not surprising due to the size of the U.S. market (over 15 trillion dollars and more than 21 percent of world GDP) and the excellent value provided by the U.S. patent system when patenting costs are examined in view of market size.

Although Canada is an affluent, high-tech society having a near 2 trillion dollar economy and close to 3 percent of world GDP, only 35,449 patent applications were filed in Canada in 2010. Assuming every patent application filed in Canada was also filed in the United States, this would mean that only 7.2 percent of patent applications filed in the U.S. are also filed in Canada. While the differential in the number of patent filings is likely due to Canada’s smaller market size, it represents a missed opportunity for many patent applicants who have filed in the U.S.

Once a patent application has been filed in the United States, the value proposition for filing an application in Canada becomes compelling. The same patent application that was filed in the U.S. can be filed in Canada without incurring much additional cost. Translation is not needed and the requirements for the form of patent applications in Canada are similar. Furthermore, the outcome of examination of patent applications in Canada is typically consistent with U.S. examination. As a result, while an originating U.S. patent has been estimated to cost about $30,000 on average to obtain, a Canadian patent corresponding to the U.S. patent can be obtained in some cases for as little as $3000-$50003. Given the low additional cost, filing a Canadian patent application corresponding to a U.S. patent application is nearly always worthwhile since it provides an additional opportunity for income generation at similar value for money to a U.S. patent.

Notes

The Canadian Patent Office itself allows a sale/licence notice to be put in the Canadian Patent Office Record and the online Canadian Patents Database free of charge.

This excludes annual maintenance fees to maintain the application or patent payable from the second anniversary to the nineteenth anniversary of the filing date as well as any costs incurred from using a U.S. or other foreign patent agent to instruct the Canadian patent agent, if applicable.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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